Sierra Leone:
Africa's Next Investment Hotspot?
Ten years ago Sierra Leone was in the throes of one of Africa's most dreadful civil wars. However, according to Dr Richard Konteh, the Minister of Trade and Industry, today this tiny West African country is gearing itself up to be Africa's next big success story
The popular image of Sierra Leone is one of chaos and war, so vividly portrayed by Hollywood and its leading man, Leonardo di Caprio in the movie "Blood Diamonds", released in 2006. This however, is not the reality at all. The people of Sierra Leone have taken charge of their own destiny and the fact is that Sierra Leone, an English-speaking country in West Africa, is today one of few countries in Africa with a fully functional multiparty democracy.
Since 2002, free elections have been held every 5 years. In 2007, in the ultimate test of democracy, the governing party lost and peacefully handed over power to the current administration led by President Ernest Bai Koroma. Today, according to Gallup, the international polling agency, Sierra Leone is the most integrated and harmonious multi-faith country in the world. Both of the leading political parties are fully committed to democracy and are supportive of economic growth and the business environment. Sierra Leone is today ranked as the most improved country in Africa. Both the Mo Ibrahim Africa Governance Index, and the World Bank’s global Governance Indicators assert this.
In stark contrast to popular opinion crime rates are actually extremely low. Freetown is the safest capital city in Africa and its police force is one of few in the world that does not carry weapons.
As a former businessman, President Koroma is focused on encouraging investment and private enterprise, while working deliberately to streamline the costs of doing business. Sierra Leone has climbed 25 places in the World Bank's "Doing Business" ranking in the last three years. The country today ranks top in West Africa for ease of starting a new business. Significantly, Sierra Leone's anti-corruption laws and institutions also rate among the toughest in Africa.
This no-nonsense approach to building the country and putting business - not politics – first is embodied by President Ernest Bai Koroma's preference for driving himself around, sometimes without security. This unrelenting focus on business has seen GDP grow by more than 6% per year since 2001. Inflation has declined steadily and exchange rates have been relatively stable, despite the recent volatility in global markets. The result has been a commendation of the government by the IMF in 2009, for its handling of the economy. Today, the IMF expects the economy of Sierra Leone to continue growing at twice the average rate of the rest of Africa.
Located on the West Coast of Africa, Sierra Leone is closer to Europe and the Americas than most other African locations. This strategic position allows it to take full advantage of its duty-free access to the United States under the Africa Growth and Opportunity Act (AGOA), and duty-free and quota-free access to the European Union under the Everything But Arms (EBA) Agreement.
The country is endowed with rich mineral wealth including some of the world's largest deposits of iron-ore, rutile, bauxite, gold, diamonds, platinum and other minerals. Gas has also recently been discovered offshore.
Sierra Leone also has the benefit of having West Africa's only natural deep-water port in Freetown. In addition, mining companies are making large-scale exports possible through the development of additional ports at Pepel and Nitti. A large-scale road-building program by the state and donors has made many parts of the country accessible by good tarmac roads. The government has also embarked on a major investment programme in the energy sector and targets to grow power generation capacity a hundred-fold in the next five years have been set.
In addition, the state of Sierra Leone has identified four key priority areas to continue driving the economy: providing reliable power; raising output and productivity in agriculture; completing its national road transport network; and ensuring sustainable human development through improved health and education.
The agriculture and fishery sectors are prime examples of the extraordinary opportunities the country offers to investors.
The government has adopted a strategy to optimise the agricultural development of the country, which has some of the highest levels of rainfall on earth. Less than 10% of the country's 5.4 million hectares of potential commercial agricultural land is currently under cultivation. Leases on prime farmland range from $5 to $20 per hectare per year, and the cost of basic unskilled labour is around $2 to $3 per day. What's more, flexible labour regulations permit productivity linked payment structures, ensuring optimum efficiency in what the state hopes will be a labour intensive industry.
All of the land that has been earmarked for the cultivation of sugar and other commercial crops is located less than 150 kilometers from the ports and is accessible by tar road. In addition, Sierra Leone offers extremely attractive tax rates with 0% taxes and duties for periods of up to 15 years for all qualified investors and imports of fertilizer and agricultural equipment are exempt from import duty.
Despite the country's many attractive investment opportunities the political leaders are acutely aware that international competition for foreign investment is stiff and that active facilitation of investment is an absolutely essential. To this end, a state-run agency, the Sierra Leone Investment and Export Promotion Agency (SLIEPA), was established in 2007 to facilitate investment and improve the overall business climate. It is an agency which offers investors not only the commitment to respond within 24 hours to all inquiries, but also provides relevant updated sector information, tailors visits for interested parties, and offers comprehensive aftercare services.